Anti-money laundering compliance officers in demand at NJ banks

Unity Bank in Clinton, which handles more cash than most banks its size, has four employees dedicated to ensuring compliance with federal laws that aim to curb money laundering.

Unity counts check-cashing stores and money-transfer businesses among its customers, and they require extra oversight — especially since the Bank Secrecy Act was expanded in 2001 under the Patriot Act to include monitoring financial activities to thwart terrorism as well as drug trafficking and organized crime.

"It's an expensive proposition, but it comes with the territory," said James Hughes, chief executive officer of the bank, which has 15 branches and $826 million in assets. Hughes would know: He is looking for a new chief compliance officer because the old one left for a job in Manhattan.

While many banks are trimming staff to cut costs in a difficult lending environment, few are willing to sacrifice anti-money-laundering compliance professionals who are in demand as government scrutiny and enforcement actions have been on the rise.

Here are some examples:

* The Federal Reserve Bank of New York earlier this year blocked M&T Bank Corp.'s planned $3.7 billion acquisition of Paramus-based Hudson City Bancorp Inc. because of anti-money-laundering compliance issues at M&T, the Buffalo lender.

* HSBC Holdings PLC paid $1.92 billion in fines to U.S. authorities last year for lapses in money-laundering controls.

* Citibank in 2012 received a cease-and-desist order from the Office of the Comptroller of the Currency for violations of the Bank Secrecy Act and underlying regulations.

Several northern New Jersey community banks have also been taken to task in recent years over deficiencies in anti-money-laundering compliance.

In 2010, Pamrapo Savings Bank in Bayonne, which has been purchased by BCB Community Bank, another Bayonne lender, pleaded guilty to conspiracy to violate the Bank Secrecy Act and was fined $5 million over failure to file suspicious-activity and cash-transaction reports.

Saddle River Valley Bank received a cease-and-desist order in 2011 from the Office of the Comptroller of the Currency and was ordered to halt international wire transfers because of deficiencies in monitoring for suspicious transactions. That bank was later acquired by Union County's Center Bancorp.

Citizens Community Bank in Ridgewood, which failed in 2009, was hit the year before with a cease-and-desist order that required upgrades of lending and anti-money-laundering programs.

'Very, very hot issue'

"BSA [Bank Secrecy Act] is still a very, very hot issue," said Princeton lawyer Travis Nelson of Reed Smith LLP. Community banks around New Jersey are tightening their belts, but not in compliance departments, he said.

New mortgage lending regulations that came out in January from the Consumer Financial Protection Bureau and take effect next year have added to bankers' regulatory concerns, he said.

According to the Association of Certified Anti-Money Laundering Specialists, if current trends continue, the chances are good banks will have to pay more in the years ahead to keep their regulatory compliance professionals from seeking greener pastures.

The trade group said last week that the median income of professionals in anti-money-laundering and financial crime detection and prevention rose nearly 6 percent from last year to $75,500.

Continuing education for compliance officers is crucial, because new rules are always being written, said Vasilios Chrisos, managing director of the trade group. These include new U.S. sanctions that target Iranian banks and shipping companies, new actions against the Syrian government and increases in the number of people on terrorism watch lists, Chrisos said.

Bank compliance officers may or may not have law degrees or even college educations, although many have backgrounds in accounting, according to industry experts.

In community banks, regulatory compliance may be one of a number of responsibilities of a middle manager. Often, the most important qualification is experience and knowledge of the rules and regulations.

New York City recruiter Len Adams, chief executive officer of Adams Consulting Group LLC, says demand for compliance officers in the New York metropolitan area, including northern New Jersey, is "very high" and supply is "dwindling a bit."

Some of the compliance jobs being filled by his firm are temporary, as some large banks and consulting firms have added staff to fix specific problems identified by regulators, he said.

"On a full-time basis there has been increased demand on the compliance side, the risk side and audit side because those areas tend to go hand-in-hand when you want to mitigate potential problems," he said.

Gerald Lipkin, CEO of Wayne-based Valley National Bancorp, said his compliance department had grown "enormously" in the past decade, mostly because of the Patriot Act and Dodd-Frank financial reform. Valley National, the largest commercial bank based in New Jersey, has "probably 40 to 50" people dedicated to Bank Secrecy Act and anti-money-laundering compliance, Lipkin said.

"Ten years ago it was probably two people," he said.

Computer systems that monitor and flag suspicious transactions have also added to the expense, he said.

Anti-money laundering compliance officers in demand at NJ banks

Unity Bank in Clinton, which handles more cash than most banks its size, has four employees dedicated to ensuring compliance with federal laws that aim to curb money laundering.

Unity counts check-cashing stores and money-transfer businesses among its customers, and they require extra oversight — especially since the Bank Secrecy Act was expanded in 2001 under the Patriot Act to include monitoring financial activities to thwart terrorism as well as drug trafficking and organized crime.

"It's an expensive proposition, but it comes with the territory," said James Hughes, chief executive officer of the bank, which has 15 branches and $826 million in assets. Hughes would know: He is looking for a new chief compliance officer because the old one left for a job in Manhattan.

While many banks are trimming staff to cut costs in a difficult lending environment, few are willing to sacrifice anti-money-laundering compliance professionals who are in demand as government scrutiny and enforcement actions have been on the rise.

Here are some examples:

* The Federal Reserve Bank of New York earlier this year blocked M&T Bank Corp.'s planned $3.7 billion acquisition of Paramus-based Hudson City Bancorp Inc. because of anti-money-laundering compliance issues at M&T, the Buffalo lender.

* HSBC Holdings PLC paid $1.92 billion in fines to U.S. authorities last year for lapses in money-laundering controls.

* Citibank in 2012 received a cease-and-desist order from the Office of the Comptroller of the Currency for violations of the Bank Secrecy Act and underlying regulations.

Several northern New Jersey community banks have also been taken to task in recent years over deficiencies in anti-money-laundering compliance.

In 2010, Pamrapo Savings Bank in Bayonne, which has been purchased by BCB Community Bank, another Bayonne lender, pleaded guilty to conspiracy to violate the Bank Secrecy Act and was fined $5 million over failure to file suspicious-activity and cash-transaction reports.

Saddle River Valley Bank received a cease-and-desist order in 2011 from the Office of the Comptroller of the Currency and was ordered to halt international wire transfers because of deficiencies in monitoring for suspicious transactions. That bank was later acquired by Union County's Center Bancorp.

Citizens Community Bank in Ridgewood, which failed in 2009, was hit the year before with a cease-and-desist order that required upgrades of lending and anti-money-laundering programs.

'Very, very hot issue'

"BSA [Bank Secrecy Act] is still a very, very hot issue," said Princeton lawyer Travis Nelson of Reed Smith LLP. Community banks around New Jersey are tightening their belts, but not in compliance departments, he said.

New mortgage lending regulations that came out in January from the Consumer Financial Protection Bureau and take effect next year have added to bankers' regulatory concerns, he said.

According to the Association of Certified Anti-Money Laundering Specialists, if current trends continue, the chances are good banks will have to pay more in the years ahead to keep their regulatory compliance professionals from seeking greener pastures.

The trade group said last week that the median income of professionals in anti-money-laundering and financial crime detection and prevention rose nearly 6 percent from last year to $75,500.

Continuing education for compliance officers is crucial, because new rules are always being written, said Vasilios Chrisos, managing director of the trade group. These include new U.S. sanctions that target Iranian banks and shipping companies, new actions against the Syrian government and increases in the number of people on terrorism watch lists, Chrisos said.

Bank compliance officers may or may not have law degrees or even college educations, although many have backgrounds in accounting, according to industry experts.

In community banks, regulatory compliance may be one of a number of responsibilities of a middle manager. Often, the most important qualification is experience and knowledge of the rules and regulations.